Mobile Product

Augmented reality has gone mainstream thanks to Pokémon Go, which has attracted even jaded New Yorkers into the game. And as Hans Klis reports, with so many young players, savvy retailers are using the game to try to catch ‘em all.

“Central Park is a good place to catch rats. Not just real ones”. The iconic New York City park is infested with Rattatas, says Jonathan Chu. The software programmer from Queens just started out playing the latest mobile craze “Pokémon Go.”

The Rattata is a very generic kind of Pokémon, he’s come to the park’s Sheep Meadow field to catch something more rare and exotic: like the dragon-like Charizard that attracted hundreds of players to the American Museum of Natural History or the plant Pokémon Venusaur that caused a stampede near West 83rd Street.

“A lot of people set out lures here in Central Park, so a lot of Pokémon pop up”. Chu hopes that he can catch better digital beasties here than near his home in Astoria Park.

Augmented Reality app “Pokémon Go” has taken the world by storm since its launch in June. It’s been downloaded more than 75 million times. The game is based on the popular Nintendo franchise and follows the same premise: you need to catch, train, and trade digital animals called Pokémon and battle other players to gain experience.

The newest incarnation that’s being played by young and old uses augmented reality that provides a novel game experience. Instead of chasing Pokémon in a made-up world, the game entices players to go outside. Using GPS and the camera on your mobile device the game makes Pokémon appear in the real world. It provides an added layer of reality that can be viewed on your screen.

Pokémon Go is so appealing because it combines nostalgia for the 1990s game with the technological novelty of Augmented Reality, Cowen & Co. financial analyst Oliver Chen recently wrote in a research report. “Pretty much everyone has a smartphone, and we’d guess a majority of people under 30 interacted with Pokémon at some point in their childhood. Nintendo’s IP is incredibly valuable and Pokémon has been a multimedia phenomenon for 20 years”.

To see how popular the game is one month into its launch, you have only to check out British Mobile app development firm AppInstitute’s online visualization of real time downloads and in-app purchases in the game.

It’s no wonder businesses are jumping on the “Pokémon Go” bandwagon to see how this newest mobile craze can be used to attract customers. Retailers like Sprint and RadioShack have all seen a surge in sales of mobile charging equipment. The telecom provider even sent out Pokémon manuals to its employees to further service players who wonder into the store in search of the digital monsters. Its rival T-Mobile has offered free bandwidth for those playing “Pokémon Go.”

GameStop is maybe the best example of a retailer to capitalize on the success of the game. “’Pokémon Go’ is creating a robust social community through the magic of video gaming,” explains Eric Bright, senior director of merchandising at GameStop.

Since the US launch in early July, the retailer has seen a more than 100 percent increase in Pokémon-related collectible sales. The sales of Nintendo 2DS and 3DS handheld systems have also doubled. GameStop has been buying inexpensive lures (about 1 dollar a piece) at store locations to attract both Pokémon and players, hosting events and offering deals.

Bright says, “Our GameStop stores have quickly become neighbourhood hangouts for customers to come together to find and train their Pokémon”.

And it’s not just retailers who are benefiting from the Pokémon Go craze. Buying 10 dollars worth of lures boosted business by 75 percent at Long Island City pizzeria restaurant L’inizio Pizza Bar in Queens, according to the New York Post.

“Restaurants are in unique position to monetize the connection of digital and physical created by Nintendo”, wrote David Shim, CEO of marketing analytics firm Placed, in a report on the mobile craze. “With promotions tied to lulls in activity, QSRs and casual dining restaurants could immediately drive traffic into their stores during their slowest times of the day.”

But research by Placed shows having a Pokémon Go strategy is not for every business. Customers at Marshall’s, The Home Depot or CVS are not likely to have the app on their devices. Shim wrote, “Not all businesses should have a “Pokémon Go” strategy as our data shows. While “Pokémon Go” dominates the news cycle, data should determine the attention that it deserves in marketing strategies for retailers and restaurants.”

The big question that is on the mind of retailers and marketing experts is: will “Pokémon Go” flame out? It might, says Derek Fridman, the Executive Creative Director at digital marketing agency Huge’s Atlanta office.

But Fridman says we are witnessing the start of a brand new technological age: “It is the start of what we believe is one of the most significant and potentially disruptive trends and dynamics in digital and retail. “Pokémon Go” is the current craze, but the larger phenomenon is about the convergence and rapid adoption of pervasive gaming, location-based activity, and mixed reality”.

Already investors in American malls are pondering a future where augmented reality is part of the store experience, according to Los Angeles-based retail research firm A-Line Partners. Not just in the way retailers might design their store interiors, but also the architecture of the mall complex itself.

Although it has been around for a few decades, Fridman says, augmented reality represents a new dynamic that brands and especially physical retailers need to acknowledge and understand. This year investments in AR and Virtual Reality have already exceeded $1.1 billion. Huge itself experimented with “Pokémon Go” at their café in Atlanta that is conveniently placed in between two PokéStops – where players can get new items – and bought $49 worth of lures. After a week it saw a 400 percent return on investment.

In a research report Huge stresses the importance of non-augmented reality: ‘Gamers are after virtual rewards, but they pick up Pokémon in real locations, which form a part of the entire memory. In other words, players don’t just remember catching a monster, they recall where it happened in the real world’.

Right now all eyes are focused on digital monsters roaming the streets, stores and parks. But augmented reality could do so much more, says Fridman. “Imagine a concert or celebrity appearance where the talent is accessible in more places than one. They’ll no longer have to be physically present to engage with a large audience. The fear of missing out will help advertisers create an immediate demand for digital goods only accessible via their physical footprint.”

And there is no need to invest in expensive VR-gear like an Oculus Rift. All you need is a mobile device.

AR advertising poses challenges to businesses because you’re using third-party software. “With an application like Pokémon Go you’re beholden to the capabilities and limitations the game maker has placed on the activity”, Fridman explains. So you can only introduce new features that might benefit your business if the AR product accommodates them in future updates.

Good examples of this are the so-called sponsored locations that “Pokémon Go” is slowly rolling out. It will be possible for businesses to pay to become a PokéStop or PokéGym that draw players who need more items or want to challenge others. In Japan, McDonald’s has already become an in-game advertiser in “Pokémon Go.” As the examples of GameStop, L’inizio and Huge have already shown attracting gamers will translate to more business, although if this has a lasting effect must still be seen.

“It’s clear that developer Niantic has a plan to monetize the product”, says Fridman. “We’ve heard rumours of co-branded PokeStops, new types of re-fuel Stops and region-specific Pokémon characters”. At a tech conference in Paris, Niantec Vice-President Mathieu de Fayet indeed hinted that the game will offer tailor-made ads for specific products—such as healing Pokémon at pharmacies or getting so-called berries, that you feed the beasts to make it easier to catch them, in supermarkets.

For now the beauty of “Pokémon Go,” probably much to the chagrin of its developer, is that businesses can benefit from its popularity without having to spend a penny.

Fridman says, “Based on the gameplay mechanic of open-world discovery, it is likely that businesses will still be able to find ways to remain part of the conversation”.

All you need is proximity to a PokéStop or a place like Central Park that is brimming with virtual monsters--preferably a fire breathing Charizard.